The most immediate return you'll get on any home improvement project is the added joy, functionality and experience of living with the upgrades. But if you're thinking of selling soon, you'll also want to consider which projects will increase your home's value the most.
With home improvements, the return on investment (ROI) describes how much money you recoup when you sell your home. Only a few projects have an ROI over 100%, meaning you make more than you spend. But an ROI under 100% isn't bad—you still enjoy the improvements in the interim and then get some of your investment back later.
Moving from the inside of your house out, here are eight projects to look into. Keep in mind that costs and ROI can vary widely depending on the size of your home, where you live, the materials you use and other factors.
1. Redo Your Kitchen
A home chef might dream of a new kitchen, but the multiweek projects can make your living space hectic. Still, it might be a worthwhile investment.
Remodeling Magazine's 2022 Cost vs. Value Report uses data from remodeling estimating software and statistical modeling to predict costs and ROI for projects. It estimates you'll recover 71.2% of a $28,279 investment on a 200-square-foot kitchen remodel, which includes replacing the laminate countertops and flooring and buying a new energy-efficient oven and refrigerator.
The National Association of Realtors (NAR) partners with the National Association of the Remodeling Industry (NARI) to estimate the median cost and recovery amount for home improvements. In their 2022 Remodeling Impact Report, they used a 2,495-square-foot home (the average home size in the U.S.) and standard-quality materials for the estimates.
Their report found the median cost for a kitchen upgrade is $45,000 and has an expected ROI of 67% (or $30,000). A complete kitchen renovation will cost an estimated $80,000, but the report says you can also expect to recover about $60,000, or 75% of what you spend.
2. Refinish or Install Hardwood Flooring
Refinishing old hardwood flooring or installing new floors can net you a high ROI. Spending an estimated $3,400 to refinish hardwood floors could increase your home's value by $5,000, a 147% ROI, according to the Remodeling Impact Report. If you don't have wood flooring, a $5,500 installation could get $6,500 in increased value later, a 118% ROI.
3. Upgrade Your Insulation
Upgrading your insulation can also be a worthwhile project that has an expected cost and return of $2,500, according to the Remodeling Impact Report. It's a break-even option that will make your home feel more cozy, even if you can't see it. Plus, more insulation can help you save money by lowering your energy bills.
4. Convert a Basement or Attic Into a Living Area
Increasing the livable area of your home can be appealing, especially if you're working from home or your family is growing. While these can also be some of the most expensive projects, they fortunately have a good ROI.
NAR and NARI estimate a basement conversion will cost $57,500, and you can recover $49,250 (86% ROI) of the expense. An attic conversion can cost a whopping $100,000 and returns $75,000 of value (75% ROI).
5. Buy New Siding
New siding, even if it's just in the front of your home, can help improve curb appeal and nearly pay for itself, but the ROI can depend on the material you use (reported ROI estimates come from both the Remodeling Impact Report and Remodeling Magazine):
- Vinyl siding: 67.2% to 82% ROI
- Fiber-cement siding: 68.3% to 86% ROI
- Manufactured stone veneer (front of home only): 91.4% ROI
Home value increases aside, replacing old siding can be important if you're worried about leaks, mold, rot, pests and insulating your home.
6. Get New Roofing
There's a large discrepancy on the expected ROI of roofing projects. The 2022 Remodeling Impact Report says the median $12,000 cost for new roofing will pay for itself. But Remodeling Magazine says replacing a 3,000-square-foot metal roof will cost $51,436 and only improve your home's value by $28,196 (a 54.8% ROI). Remodeling Magazine also looked at asphalt shingles, which have a lower expected cost of $31,535 and slightly higher ROI of 59.6% ($18,780). The bottom line: You'll likely recoup more than half the cost to re-roof your home—and avoid water damage while you're at it.
7. Replace Your Garage Door
A new garage door can also add curb appeal and might pay for itself. But prices can vary significantly depending on the material you choose. While Remodeling Magazine estimates the average cost is $4,041 and leads to an increased resale value of $3,768 (93.3%), NAR and NARI have a rosier outlook. Their report estimates the cost and recovery at $2,000 each—a 100% ROI.
8. Install New Vinyl or Wood Windows
New windows can also offer immediate and long-term value. Energy Star says you can expect to pay anywhere from $400 to $1,600 per window depending on the glass and finish, which can quickly add up. But it also says homeowners save an average of 12% on their energy bills after upgrading to Energy Star-certified windows.
For your long-term ROI, new vinyl windows recover more of the upfront cost (about 67%) than new wood windows (63% to 66%), according to Remodeling Magazine and the Remodeling Impact Report.
Look Into Tax Savings on Energy-Efficient Upgrades
Home improvement costs can depend on where you live and the current cost for materials and labor, but there are tax credits and rebate programs that might help.
Starting in 2023, the energy-efficient home improvement tax credit offers a credit for up to 30% of your expenses, capped at the limits below, for energy-efficient home improvements. Some of the projects highlighted above that may qualify include:
- Exterior doors ($250 per door, $500 total)
- Exterior windows and skylights ($600 total)
- Insulation and air sealing ($600 total)
You can also get up to $150 toward a home energy audit, which can help you prioritize improvements. However, there's a combined $1,200 annual limit on most projects.
Beyond the new federal tax credit, see if you can qualify for any additional savings with the Energy Star Rebate Finder and North Carolina State University's Database of State Incentives for Renewables and Efficiency.
Consider How You'll Pay for Large Projects
You may need to take out a loan to pay for major home improvements. A home equity loan or line of credit are two options, and your interest payments are potentially tax deductible. But if you don't want to use your home equity to get a loan, an unsecured personal loan could be a good alternative.
Personal loan lenders approve or decline your application based on your creditworthiness, which you can check by reviewing your free Experian credit report and credit score. Experian's CreditMatchTM tool can also help match you with personal loan offers based on your credit profile.